Mechanical Royalties
A specific type of royalty generated each time a musical composition is reproduced, either physically or digitally.
A mechanical royalty is a payment made to the songwriter (and their publisher) every time a musical composition is reproduced. Historically, this meant the physical reproduction of a CD or vinyl record. In the modern era, it primarily applies to interactive digital streams (like Spotify or Apple Music) and digital downloads (like iTunes).
How They Are Generated
Whenever a song is streamed on an interactive platform, it generates two distinct types of royalties:
- The Master Royalty: Paid to the owner of the sound recording (usually the label or the artist).
- The Publishing Royalty: Paid to the owner of the composition (the songwriter).
Mechanical royalties make up a significant portion of the Publishing Royalty pie. The streaming service is required by law to set aside a statutory percentage of their revenue to pay out these mechanicals to songwriters.
Collection
Unlike Master royalties which are typically paid directly by a distributor (like DistroKid or TuneCore), mechanical royalties must be collected by a mechanical rights organization (MRO) or a publishing administrator. In the United States, the Mechanical Licensing Collective (The MLC) was established to collect and distribute these specific digital mechanical royalties.